Pseudo Group Health Plans
Are Low-Cost Substitutes

What’s a pseudo group health plan? By “pseudo”, we mean almost, but not quite. They can have the appearance and some or most of the benefits of the real thing. These nearly group plans are a reasonable answer for employers who cannot afford to provide full employee insurance benefits and for those who have part-time employees or independent contractor affiliates who are not eligible for group benefits.

Types of Plans:

These simulated group plans can take various forms, depending on the employer’s situation and on the needs of the employees. Some pseudo plan types might even be combined in one manner or another.

We’ll cover three prominent examples:

Premium Only Plans, or POP’s;

List Bill Plans; and

Limited Benefit Plans.

With any or all of these pseudo group plans, we can combine our low-cost Fitness Culture programs for Medical Self Care Prevention and for Affairs Management, for the Personal Fitness Plan and for the Patient Care Plan. In addition to the pseudo group plan, an employer can offer these Fitness Culture programs as fully or partially paid employer benefits to help employees and to stimulate the Workplace Fitness Culture environment.

Premium Only Plans (POP):

For small group plans in which employees pay a portion of the premium for their plan, the employer may sponsor it as a Premium Only Plan, or POP. This is done by adding an IRS Section 125 program that allows employees to pay their portion of health, dental and group life premiums with pre-tax funds. That can enable employees to save 25 to 40 percent of the cost of qualified premiums through pre-tax payroll deduction.

Employees can also make contributions to Health Savings Accounts for additional pretax savings on qualified medical expenses, but payments from the HSA funds could not include premiums.

Employers can save on the POP program because employee contributions are subtracted from taxable payroll, thus decreasing the 7.65 percent employer FICA tax on the amount of such contributions. At their option and as alternative benefits, employers could make contributions to employee HSA funds. Such contributions would become employee funds and be subject to disbursement in accordance with HSA qualifications.

To request a POP proposal, go to the Guide for Group Quotes. Follow instructions to complete a Group Plan Quote Request and indicate that you are interested in the POP program.

List Bill Plans:

The List Bill Plan format can be a terrific pseudo group alternative for employers that cannot or do not provide group health coverage to employees. This is a billing option that permits an employer to contract with a single insurer to set up a payroll deduction system to administer premium payments made by employees for their individual or family health plans.

Advantages for Employers: This is usually a low cost or no cost service. It is a value option that makes health plan premium payment and administration very simple and convenient for employees, especially when combined with our Medical Self Care and Patient Care programs. It is a quick and easy process to set up and requires minimal responsibilities for the employer. Unlike group plans, there is usually no participation requirement and participants can include 1099 independent contractors.

Advantages for Employees: The employee can select from any of the individual or family health plans offered by the selected insurance company. In some cases an individual or family plan may be a lower-cost alternative than a group plan that includes coverage and plan designs the individual does not want.

The automatic payroll deduction plan for premium payment is very convenient and requires no time and attention on the part of the employee. The coverage stays with the employee, so is portable. The employee can combine a qualified health plan with an HSA for tax benefits. In such event, the employer has the option to contribute to the HSA fund.

How Does the List Bill Plan Work? The employees select the individual health plan that best fits their budget and needs. Each employee completes an individual health plan application or family health plan application (See links below) as appropriate. Finally, each employee must then notify the employer payroll office and enter into a list bill agreement form to begin deductions.

The pseudo group employer must initially complete a List Bill Agreement with the insurer. The employer would then deduct all of the monthly premiums due on each individual plan from the respective employee paychecks. The employer will receive from the insurer one consolidated “list bill” for all employee monthly premiums. The employer will then remit one consolidated monthly payment covering premiums for all listed employees to the insurer.

Due to statutory limitations, the List Bill format is not available in Hawaii, Maine, Massachusetts, New Jersey, New York, Rhode Island, Vermont and Washington. It is permissible in all other states, although some require a minimum of 50 full-time employees to qualify. The determining factor for statutory application is the location of the employer home office.

List Bill Limitations and Disadvantages: Because the pseudo group health plans are for families and individuals, not real groups, they are subject to individual underwriting standards. In addition, premiums are not tax deductible for employees. Employers can not contribute to employees to apply to premium payments. But, employers can contribute to employee HSA funds to pay qualified medical expenses. Employers can also fund all or part of the Wellness Culture assistance programs.

To get additional information on the List Bill Plans, go to our Contact Us Page. Request information and give us summary information on your firm and the profile of employees (approximate age and number of employees and of families) you think might participate in this program. Starting a List Bill program will require employer completion of pertinent questions on the insurer's Employer Profile form, on the Personal Health and Fitness Request Page and on a List Bill Agreement that will be provided upon request.

In addition, each interested or participating employee will need to complete and send an Individual Health Plan Quote Guide or a Family Health Plan Quote Guide as appropriate.

Limited Benefit Plans:

The third pseudo group plan option are Limited Benefit Plans. These are in fact individual and family health plans that are limited in coverage or plan design in order to reduce premium cost and to offer the most affordable coverage. Such plans could be combined with List Bill Plans and with the Fitness Culture assistance programs to develop a worthy employee health benefit.

Basic Limited Benefit Plans typically cover physician office visits, outpatient medical services and outpatient surgical services, with limited maximum benefits.

Better Limited Benefit Plans add coverage for surgical services, anesthesia services, ambulance services, emergency services, hospital inpatient services, other non-surgical services and life insurance, with limited maximum benefits.

The Best Limited Benefit Plans cover all of the Better Limited Plan services, but with even higher maximum benefits. However, the maximum benefits of these plans do not approach the top limits of comprehensive health plans.

Best Pseudo Group Option:

Probably the best pseudo group plan option involves combining the Limited Benefits Plans and the List Bill program with the Fitness Culture programs. This will require employer completion of pertinent questions on the insurer's Employer Profile form and the Fitness Culture Plan Request Page, along with List Bill documents and the individual quote or family quote request.

Each interested, participating employee will need to complete and send an Individual Quote Page or a Family Quote Page , as appropriate, making note of interest in a Limited Benefit Plan. They should also get quotes on high deductible plans for comparison.

For ideas on Fitness Culture, go to Fitness Culture.

For information on Medical Self Care Prevention, go to Self Care Prevention.

For information on Medical Self Care Management, go to Self Care Management.

For information on Patient Care, go to Patient Care Plan.

For information on HSA’s, go to Health Savings Accounts.

If you have questions or need additional information, go to our

Contact Us Form.

WARNING: NEVER CANCEL YOUR CURRENT INSURANCE UNTIL REPLACEMENT COVERAGE IS APPROVED AND IN PLACE.

To get a Fitness Culture Proposal, go to Fitness Proposal Request.

To get an actual Group Health Plan quote, not a pseudo-group quote, go to Group Quote Request.